It’s a thing now; drivers under age 25 use a comparison site, they receive quotes ranging from £3500 to over eight grand to insure a car worth 3K Part-Ex. They want something on their phone they can show the Police if stopped roadside. So it’s onto WhatsApp, TikTok, Telegram etc and hey presto, they seem to be covered for £800 instead. Nice.
The insurance sector has to realise they are fighting human nature here. Maybe they have and that’s why low experience drivers are being quoted thousands? The risk of accidents is too high perhaps. In which case regulators like the FCA and other policymakers in government need to develop their own young driver scheme with the taxpayer as the backstop, they could make face scans and digital ID part of the quote process too, thus hitting another govt target? Just thinking out loud that’s all.
Here’s the word from the FCA;
Half (49%) of young drivers have bought insurance through social media or messaging apps, new research reveals. With 4 in 10 (39%) unconfident in spotting the signs of a fake policy, thousands could be paying for cover that doesn’t exist.
The Financial Conduct Authority (FCA) is warning 17–25 year-old drivers about “ghost broking” scams where criminals sell bogus insurance policies through social media and messaging platforms. Ghost brokers pose as legitimate insurance sellers but offer cheap rates. The policies they sell are either entirely fake, are invalid because they falsify details to bring the price down, or are cancelled shortly after purchase. Victims are left unknowingly uninsured and at risk of prosecution, fines and even having their car seized.
Almost half of those polled (45%) said they generally trust products or services bought through social media. Young drivers may also be at greater risk due to cost of living pressures – with 1 in 7 (15%) saying they find it difficult to fit insurance into their monthly budget.
To avoid being taken for a ride, the FCA is urging young drivers to:
- Be wary of offers that sound too good to be true
- Avoid deals only available through social media and messaging platforms. Genuine sellers should have a legitimate website, phone number and address
- Use FCA Firm Checker to confirm the firm is authorised. Drivers should check the firm’s contact details match those listed on Firm Checker to make sure they are dealing with the genuine firm.
Graeme Reynolds, director of insurance at the FCA said:
“Tight budgets make cheap offers tempting – and scammers take advantage of that. Don’t get ghosted by a policy that doesn’t exist. Check the FCA Firm Checker before you buy, because driving uninsured could cost you far more than any premium.”
The FCA is working with social media influencers to warn young drivers about the growing threat of ghost broking.
INDUSTRY COMMENT;
BROADSTONE
Cormac Bradley, Senior Actuarial Director at leading independent insurance consultancy Broadstone, commented: “Despite recent falls in motor insurance premiums, young drivers continue to face comparatively high insurance costs which can make offers of cheaper cover on social media appear attractive, particularly during a period of ongoing budgetary pressures.
“However, ghost broking scams can leave motorists unknowingly uninsured, exposing them to significant financial, legal and personal risks or worse if they are involved in an accident. The FCA’s findings highlight the importance of buying insurance through trusted and regulated providers. If a deal looks unusually cheap or is only available through social media or messaging apps, that should immediately raise concerns.
“There is also an opportunity for existing insurers to evolve and diversify their distribution strategies so as to reach younger motorists through the channels they increasingly use, while ensuring those journeys remain secure, transparent and properly regulated.”
CRIF
Sara Costantini, Regional Director for the UK & Ireland at CRIF, said: “The FCA’s findings about the number of young drivers buying fake insurance via social media is concerning – and may be resulting in many motorists unknowingly driving without cover.
“Rising premiums in recent years are likely to have pushed younger drivers towards social media, purchasing what may look like good policies that come at cheaper costs. This is echoed in our own research, which finds that 43% of Gen Z feel the cost of insurance, combined with the recent increases in petrol and diesel costs due to the Middle East conflict, is making driving unaffordable.
“As a result, over a third (36%) of this younger generation believe that insurers must do more to make their policies affordable and consistent, and a quarter (26%) say that despite premiums falling, motor insurance still feels expensive.
“Solving the issue of fake insurance policies will take a collaborative industry approach, and insurers can do their bit by utilising the latest innovations in consumer profiling, open banking data and analytics to better understand customers. The result offers improved risk management, personalised pricing and more competitive policies, benefitting providers and consumers alike.”
FOIL
Mark Hemsted, Partner, Clyde & Co, comments:
“Recent media coverage of ghost brokers in motor insurance takes the issue of fraud even further. As legitimate cover becomes harder to access for younger drivers, fraud is filling the gap, exploiting weaknesses in distribution and consumer understanding.
“If drivers genuinely believe they are insured, insurers could see complex disputes around misrepresentation. The uncomfortable reality is that ghost broking increasingly sits alongside criminal activity and market design. If high premiums and complex products are driving consumers towards illegitimate channels, regulators are likely to expect firms not just to reject claims after the fact, but to show they have actively reduced the risk of harm in the first place.”
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